For as long as publishers have been distributing information products, piracy has been a concern. For the purposes of this specification the term "information product" includes, but is not limited to computer software, data, images, music, applets, photographs, animations, video, audio, text, hypertext and multimedia works.
As a practical matter, large-scale piracy committed by professional thieves is easier for publishers to detect and police because of the inherently commercial and public aspects of large-scale piracy. Small-scale piracy committed by individuals who, for example, purchase one copy of a computer program and install it on three or four computers in a small office are more insidious and, in the aggregate, economically more harmful to publishers.
Several techniques have been used by publishers of information products to impede piracy. When music was first distributed on CDs, CD duplicating equipment were expensive and rare and publishers implicitly relied on "physical security" to impede small-scale copyright infringers. The theory underlying physical security is that the difficulty in duplicating the media containing the information product is sufficient to stop most small-scale infringement.
When it is difficult for the end-user to duplicate the media, or to transfer the information product from one computer to another over a network, the publisher can be reasonably assured that widespread piracy is not occurring. Of course, the end-user could lend, lease or sell the media embodying the information product to another who would install it, and physical security could not prevent it.
When the technology for duplicating the media embodying an information product becomes ubiquitous, or it becomes easy to copy the information product from one computer to another over a network, publishers often employ "cryptographic security" to thwart copyright infringers.
According to one technique, the installer accompanying the software will not install the software on the end-user's computer until an acceptable password is entered by the end-user at the time of installation. The password is received by the end-user from the publisher after the end-user registers with the publisher and the publisher is assured that the end-user has paid for the software. Although this technique is widely used, it suffers from the weakness that the end-user can use the media and password again to install the software on another computer. Furthermore, the end-user can post the password publicly on an electronic bulletin-board and the advantage of the secret password are lost.